10 basic options strategies

Like a Butterfly, a Condor allows you to express an opinion as to where you think the market may be at expiration. Rather than choosing a single price, though, a condor is used to select a price range.

Long Condor: All calls or All Puts — Long A, Short B, Short C, Long D

Use if you expect the market to move, but you are not sure how far it may move. The Condor allows you to choose a range that you think the market may end it. Maximum profit realized if market is between B and C at expiration, and maximum loss if market is below A or above D at expiration.

Short Condor: All Calls or All Puts — Short A, Long B, Long C, Short D

Enter if the market is between B and C, but you think it will move strongly outside of that range by expiration. Maximum profit will occur if market is below A or above D at expiration, and maximum loss if position is held until expiration and market ends between B and C.

About the Author

Michael McFarlin joined Futures in 2010 after graduating summa cum laude from Trinity International University, where he majored in English/Communication. With the launch of the new web platform, Michael serves as web editor for the site and will continue to work on the magazine, where he focuses on the Markets and Trading 101 features. He also served as a member of the Wisconsin National Guard from 2007 to 2010. mmcfarlin@futuresmag.com